Hertz will receive net cash proceeds of approximately US$2.5 billion from a Hertz Equipment Rental Corp (HERC) spin-off. The proceeds will be used to pay down Hertz debt and support a newly approved US$1 billion share repurchase program. The separation is planned to be in the form of a tax-free spin-off to Hertz shareholders and is expected to close by early 2015.
HERC rents a broad range of equipment including pumps. The business had annual revenues of more than US$1.5 billion in 2013, with 38% of its 2013 revenues derived from the construction market, 26% from industrial, 36% from other markets including oil and gas, and from other specialty niche markets, such as pump and power, government services, and the entertainment industry. HERC has 335 branches in the US, Canada, France, Spain, China and Saudi Arabia, as well as international franchisees.
Following the HERC separation, Hertz will be comprised of the Hertz, Dollar, Thrifty and Firefly rental car businesses as well as Donlen, a provider of fleet leasing and management services.